The G7 is looking to cap Russian oil prices by December as China and India show interest in minimizing import costs, report says

• The G7 is looking to cap prices on Russian oil before December 5, when a new round of EU sanctions will take effect.
• A senior G7 official told Reuters that China and India are interested in minimizing their oil import costs.

The G7 is looking to cap prices on Russian oil before December 5, when a new round of European Union sanctions will take effect, sources told Reuters.

The EU sanctions will ban finance and insurance services related to seaborne Russian oil, potentially taking millions of barrels off the market. The G7 has proposed an accompanying price cap to avoid a supply crunch while limiting Moscow's oil revenue.

But for a price cap to be effective, top buyers of Russian oil must be onboard as well. And a senior G7 official told Reuters that China and India are interested in minimizing their oil import costs.

While both countries have been buying up Russian crude at steep discounts, government spending on energy subsidies that are used to keep retail fuel prices in check have raised budget concerns.

Analysts have warned that capping Russian oil could lead to retaliation from Moscow, which could abruptly slash production to trigger a price spike.

But the G7 — which is comprised of the US, Canada, Japan, Germany, France, Italy and Britain — is hoping a price cap that's set above Russian production costs will still provide enough incentive to keep its oil flowing to markets.

The plan essentially gives Russia an ultimatum: accept lower oil revenue or risk losing most of it when the new EU sanctions kick in on December 5.